At a Washington news conference in late June, Fed Chairman Ben Bernanke confirmed that the Fed would “taper” its efforts to help stimulate the U.S. economy. And despite the average 30 year fixed rate hovering around 4.5 percent from 3.35 percent in early May, he suggested the housing market may be strong enough to withstand higher borrowing costs.
Good news lies in the nation’s improved economic health. According to Bloomberg and S&P/Case-Shiller index data released in late May, home prices made their biggest gain in seven years, rising 10.9 percent across 20 metropolitan areas. Buyer demand, limited inventory and an improving job market have bolstered real estate.
Mortgages are tied to the bond market, and as investors shift their funds away from bonds into stocks, rates have risen and succumbed to volatility. Many hope the bulk of the sell-off activity is over and that rates will be more stable for the remainder of the third quarter.
As buyers duke it out for properties, they are locking in home loan rates. Housing is a key indicator of the nation’s economic health, and signs are pointing to a slow recovery.
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